The U.S. economy posted its weakest first quarter growth in three years as consumers crimped on spending. Fred Katayama reports.
U.S. economic growth sputtered in the first quarter. Gross domestic product rose at an annual rate of 0.7 percent - well below economists' forecasts. That's the weakest performance in three years. The big culprit: consumers crimped on spending. They spent less on heating because of the mild winter weather. Higher inflation also weighed on the wallet as did government delays in issuing income tax refunds. Consumer spending is key because it accounts for more than two-thirds of economic activity. Also hurting growth: businesses invested less to restock their shelves. The rate of inventory accumulation fell nearly 80 percent. On the positive side, exports rose briskly, and business spending on equipment jumped. The GDP report may not accurately reflect the economy's health. The jobs market is near full-employment. And consumer confidence is high. That suggests the cutbacks in consumer spending may be temporary. Chase chief economist Anthony Chan said, "Today's weak GDP report highlights the seasonal factor problem we have with first quarter data over the last 5+ years. We expect a strong rebound in the second quarter." The slow growth presents a challenge to President Donald Trump. He has vowed to boost growth to 4 percent by targeting infrastructure spending, tax cuts, and deregulation.